Alibaba shares rise after central bank orders revamp of affiliate Ant Group
The People’s Bank of China has asked Ant Group to restructure into a financial holding company
Regulators have ordered Alibaba’s financial technology affiliate Ant Group to revamp its business, sending the e-commerce giant’s Hong Kong shares to close 0.43 per cent higher.
That, along with a 18.23bn yuan ($2.78bn, €2.3bn, £2bn) fine Alibaba received as a result of an anti-monopoly investigation by regulators, removed skepticism for investors.
Hong Kong-listed shares of Alibaba rose about 4 per cent at the open but pared those gains throughout the day. Alibaba’s US-listed shares closed over 9 per cent higher on Monday but were about 1.6 per cent lower in pre-market trade.
Alibaba owns a roughly 33 per cent stake in Ant Group, which runs the popular mobile payments app Alipay in China.
In November, regulators forced Ant Group to suspend what would have been a record $34.5bn initial public offering (IPO) in Hong Kong and Shanghai.
At the time, changes in the financial technology regulatory environment were blamed for the suspension of the listing.
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That came just days after founder of Ant Group and Alibaba, Jack Ma, made some comments that appeared critical of China’s financial regulator.
In December, the People’s Bank of China (PBOC) ordered Ant Group to rectify its business. And on Monday, the Chinese central bank outlined details on what the company needs to do.
The PBOC asked Ant Group to restructure into a financial holding company. Ant Group must also create more separation between its payment app Alipay and its credit products.
Yu’e Bao, Ant Group’s money market fund, must also be reduced in size, the PBOC said.
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